If enough people believe their Zestimate to be true (consumers, journalists, realtors, whomever) – then reality really can be altered. It just shows how malleable the wisdom of the crowds really is.
Oh, good grief… Consciousness does not cause reality.
The meta-topic is interesting, however, first because it highlights one of the more pernicious aspects of Web 2.0, the idea of collective wisdom, and second because it brings out one of the better features of Web 2.0, the ferocious pursuit of canonical truth.
In the first case, the social web is largely harmless, even if its epistemology is absurd. The nonsense Joel Burslem is citing would be dangerous — and assuming that he is not actually joking — if it actually came to pass, but this seems hugely unlikely. One of the subterranean tenets of Post-Modernism is the subtly communicated dictum that nothing matters until it does. David Letterman does not chuckle when you back into his car. The owners of Zillow.com will not buy or sell real property on the basis of their own dubious Zestimates. In any real-life real estate transaction, if one party loves the Zestimate, then the other necessarily hates it. If people labor in error, in Wikipedia or elsewhere, it is because they believe the marginal cost of improving their knowledge of reality exceeds the marginal benefit of having done so — which calculation may itself be in error.
So what falls out? It is possible that people directly involved in real estate transactions may decide that the cost of pursuing a better alternative to Zillow exceeds the benefit. This seems doubtful to me, but we can stipulate the point for the sake of the argument. Even so, their doing so will not have “altered” reality. Zillow will still and always be unable to report the most important fact about the structure — is it still there? — at the time of the Zestimation. To agree to decide something by a means that is known to be fundamentally defective but which is nevertheless mutually-acceptable to the parties is not metaphysically dispositive, despite the fabulist hyperbole we hear everywhere. The ranch that became the town of Show Low, AZ, was “sold” on the turn of a card. This didn’t alter reality, either.
But: The true killer application of Web 2.0, weblogging, is overwhelmingly predisposed to rooting out error and falsehood wherever it is found. Whether this is an attribute inherited from the early webloggers or an artifact of the interaction among weblogs (which we are seeing writ small in this debate), in the long run, in the blogosphere, truth will out.
The fact is, no thoughtful person would rely on a Zestimate where their own house or money were at stake. The polling at Sellsius&176; Blog is bearing this out very clearly. What is being “altered” is not reality but the state of public posturing about reality. This, alas, is not new…
Technorati Tags: blogging, disintermediation, real estate, real estate marketing
Tim says:
Isn’t it perceived by many in the business that if you are within 5% of the eventual sales price then you priced the home correctly? I know many homes sell for full price, above and below asking, but isn’t there the old affirmative head nod that this is so?
I’ve discussed pricing at length with folks in our market about this issue. An old neighbor of ours received several CMA’s and the spreads were around 15%-20% from the high to low–for the suggested list price. So, I think that the notion of Zestimates being way off is moot. Further, I had two bona fide appraisals on my existing home. $40K spread between the two. Four out of five comps used were identical. Strange science.
August 15, 2006 — 10:11 pm
Greg Swann says:
> Isn’t it perceived by many in the business that if you are within 5% of the eventual sales price then you priced the home correctly?
I wouldn’t know that. Smells like collusion to me. In many neighborhoods, I can tell you to the dollar what a home will sell for. Not asked, not offered, but what it will actually go for. There are other neighborhoods we work in where I will not do a CMA. We insist on a full appraisal, and then we won’t list over that appraisal.
> So, I think that the notion of Zestimates being way off is moot.
A Zestimate cannot be “off” or “on”. It cannot be accurate or inaccurate. What is being evaluated is not a house but statistics and documents about that house. As I have demonstrated, the Zestimated house my not even be there. The results can have a greater or lesser correspondence to reality — which attribute is equally true of astrology — but a Zestimate is not a statement about reality. This issue is not whether or not the Zestimate is more or less correspondent to reality. The issue is whether it is wise to substitute calculations based upon statistics and documents about a house for an actual, objective, on-site evaluation of that house. This is a determination an informed party — such as a mortgage lender — can make at his own peril. To induce ordinary haphazardly-informed consumers to do so strikes me as being fraudulent.
August 15, 2006 — 10:29 pm
Tim says:
“…induce ordinary haphazardly-informed consumers..”
LOL. Come on Greg, give consumers a little more credit than that!
“The issue is whether it is wise to substitute calculations based upon statistics and documents about a house for an actual, objective, on-site evaluation of that house.”
I understand what you are saying and agree in spirit. But, I would add that one can’t discount stats, comps, and data because it is the very tool/standard that agents and appraisers use. The on-site evaluation is then used to either confirm the stats/comps or show a need for adjustment.
August 15, 2006 — 11:22 pm
Greg Swann says:
> But, I would add that one can’t discount stats, comps, and data because it is the very tool/standard that agents and appraisers use. The on-site evaluation is then used to either confirm the stats/comps or show a need for adjustment.
Drinks. Dinner. Fifth-row orchestra seats. A Hansom cab through the park…
…and still you went home alone. Doing the job is doing the whole job. Everything else is just preparation.
August 16, 2006 — 7:54 am
Joel Burslem says:
The post was half tongue-in-cheek Greg. Of course consciousness does not cause reality. Though sometimes I wish it did. 🙂
However, when we’re talking about something that’s as nebulous as a home appraisal (i.e. most consumers have no idea how they’re attained) I think the argument has some merit. Appraisals are a fluid concept and are regularly manipulated to support listing prices, whether people like it or not. A home’s real value, while rooted in fundamentals, is ultimately derived from perception.
My point was that Zillow’s tools and overall marketing strategy in releasing it’s Zestimates everywhere is successfully altering that perception amongst most people.
August 16, 2006 — 8:29 am
Greg Swann says:
> My point was that Zillow’s tools and overall marketing strategy in releasing it’s Zestimates everywhere is successfully altering that perception amongst most people.
I agree that this is true, I just don’t see it as being good, either in the sense of consumer protection or in the more abstract sense of bonum, verum, pulchrum — The Truth writ large.
And: It doesn’t actually matter to me. If both parties agree to use an AVM-generated price, we’re golden. If not, we get an informed opinion. Either way, my work doesn’t get interesting until we have a meeting of the minds. Where Zillow is wildly out of correspondence with reality, it’s easy to shoot down. Where it isn’t, it might be a useful middle ground between the parties. And, ultimately what the property is worth is neither my informed opinion nor Zillow’s blind guess, but what the seller accepted for it in trade.
Moreover, I could argue that up-or-down Zestimation may become the norm for very-low-priced properties. At $30,000, an appraisal is 1% of the purchase price. At $3,000, it’s 10%. Could that appraisal swing the final purchase price by more than 10% in either direction? If not, close enough is probably good enough. Would you forego an appraisal on a $3 million home? In that case, however things turn out, the appraisal could be the best investment you ever make.
My apologies for misinterpreting you.
August 16, 2006 — 9:01 am